Sizzle sizzle, palm oil

Price spikes have been targeting peoples dinner menus lately, be it the dessert counter or the dairy delights. And now the savoury main course is also likely to bear a blow as international palm oil prices have been rocketing lately.
The greasy commodity reached the highest price in more than two years, spiralling to $1,123 per ton on Wednesday. Expected production for 2010-11 is believed to fall short of demand, stemming mainly from China, helping rev up prices considerably.
As is the case with any commodity facing a price momentum, speculative monies may also be responsible for the price increase. International media cited Ram Menon, a director at Tionale Industries Bhd., a Johore-based exporter of Malaysian palm oil, as saying, "A lot of people are speculating on prices. People are upbeat, but theres no shortage of palm oil. Its all speculative."
For the local import bill, this presents a cause for concern. Palm oil imports accounted for 40 percent of the food import bill, and around 4 percent of the total import bill of Pakistan. Of the total amount of edible oil consumed in the country, nearly a quarter is locally produced while the rest is imported, soybean and palm oil precisely.
The latest data reveal that in the 4MFY11, palm oil import costs had surged up by 44 percent over the same period of FY10. Analysts expect prices to go up further on account of strong demand and lower production expectations for the coming year, and this definitely doesn paint a very pretty picture for Pakistans import bill.
In this cautionary scenario of swelling palm oil prices, the governments move towards increasing the area under cultivation for the sunflower crop, as well as the higher support prices for farmers of the golden flower are quite encouraging.
Complementing these measures is the provision of hybrid seeds and fertilizer to farmers of both canola and sunflower, with support from the USAID.
Yet, the promising endeavours are not believed to bring about any sweeping turnaround in local edible oil production. "I don think the change will be very significant, far from reducing the dependence on imports considerably," a key player in the edible oil industry told BR Research.
The increased acreage of sunflower cultivation is expected to yield approximately 20,000 tons more of sunflower oil and around 30,000 tons more of canola oil, which, combined, is roughly 1.5 percent of the total edible oil consumption of the country.
But even though the steps are small, they are, indeed, in the right direction. For a voracious population where an individual consumes an average of over 16 kg of edible oil every year, it is such strides that will help reduce the countrys burgeoning food import costs.